Helge Autoparts sells new and refurbished auto parts exclusively to auto dealers. Helge purchases inventory from distributors at trade conventions. Each time Helge makes a purchase, the company records the suppliers name, address, date, specific items purchased, price paid for each, and the total amount spent. Helge later researches the inventory items to set the customer price. The company
assigns an inventory number to each item purchased and records the customer price for each item. Helge buys price tags and display supplies from Alwin Incorporated, a company that sells them at all trade conventions. All inventory and supplies purchases are immediately paid for with cash or with checks from a bank account in Helge's name. All cash received from sales are also deposited to the same bank account. Several times a year Helge rents display space at dealer conventions. A deposit is always required, and the entire fee is due the day the convention starts. Helge records the deposit and final payment, along with the convention's name and address, in the same worksheet on which purchases of inventory and supplies are recorded.
Consider Helge's processes regarding the purchasing inventory and supplies, renting display space, and paying for purchased items. In a well-designed REA diagram, what entities would reflect economic duality?
A) Purchases and Cash Disbursements
B) Display Space Rental and Cash Disbursements
C) Inventory and Purchases
D) Cash and Cash Disbursements
Answer: A
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Because information is scarce,
A) equity contracts are used much more frequently to raise capital than are debt contracts. B) monitoring managers gives rise to costly state verification. C) government regulations, such as standard accounting principles, can help reduce moral hazard. D) all of the above are true. E) only B and C of the above are true.
Price transparency refers to the ability of consumers to discover what merchants actually pay for products
Indicate whether the statement is true or false